Prospects for healthy fundamentals in second half of 2023 to ensure global oil market stability: OPEC

The oil cartel kept its demand outlook unchanged for 2023.

Prospects for healthy oil fundamentals in the second half of the year will ensure stability of the global oil market, said the Organisation of Petroleum Exporting Countries (OPEC).

“Prospects for healthy oil fundamentals in the second half of the year, along with the preemptive, proactive and precautious approach of OPEC and non-OPEC producing countries to assess market conditions and take necessary measures at any time and as needed, will ensure stability of the global oil market,” said OPEC in a report on August 10.

This comes as crude oil prices have gained momentum since July after Saudi Arabia, the world’s largest producer of crude oil, slashed supply by 1 million barrels per day (bpd) in the month.

Crude oil prices are trading above $85 per barrel in recent weeks on account of tight supply in the market as compared to $75 per barrel in June.

Earlier in May, Saudi Arabia had reduced supply by 500,000 bpd, while Iraq had cut over 200,000 bpd until the end of the year. Russia had announced an extension of its production cut of 50,000 bpd from May until the end of 2023. In total, OPEC and its allies, commonly known as OPEC+, had in May announced oil production cuts of 1.6 million bpd for 2023.

OPEC said the outlook for oil market fundamentals improved further in July, which was reflected in the strengthening of the market structure as all major oil futures prices turned to a firm backwardation structure.

“For the month (of July), ICE Brent increased by $5.18, or 6.9%, m-o-m, to stand at $80.16/b, and the NYMEX WTI front-month contract increased by $5.76, or 8.2% m-o-m, to an average of $76.03/b,” the report said.

The oil cartel kept its demand outlook unchanged for 2023 and foresees demand to rise by 2.4 million bpd to an average of 102.0 million bpd.